IRS Updates Web Site - Health Care Tax Credit and American Recovery and Reinvestment Act

4/29/2009

The IRS updated its Health Care Tax Credit (HCTC) web site (http://www.irs.gov/individuals/article/0,,id=109960,00.html) with information about the interaction of HCTC and The American Recovery and Reinvestment Act (ARRA).

ARRA temporarily changed benefits provided under HCTC. The changes to HCTC (including the new timeframes for extended COBRA benefits) will expire on December 31, 2010. They are only valid for the remainder of 2009 and 2010.

The Trade Act of 2002 created the HCTC to help reduce the cost of COBRA coverage for a limited group of individuals (these include individuals who become unemployed as a result of increased imports from, or shifts in production to, foreign countries, as well as certain PBGC pension recipients). ARRA included temporary changes to HCTC.

Updated information on the IRS site include:

(1) The HCTC tax credit has increased from 65% to 80% of qualified health insurance premiums.

(2) Newly enrolled participants will be able to receive a credit on their HCTC accounts for qualified health insurance payments paid in 2009 while enrolling in the monthly HCTC Program.

(3) HCTC will be available to family members for a longer period of time.

The webpage explains that COBRA benefits are temporarily extended for certain HCTC-eligible individuals (but not beyond December 31, 2010).

TAA-eligible and ATAA-eligible individuals can receive COBRA for as long as they continue to meet the definition of TAA-eligible and ATAA-eligible individuals.

PBGC benefit recipients can receive COBRA as a lifetime benefit. In the event of the benefit recipient's death, the surviving spouse and dependents can receive COBRA for an additional 24 months.

Recipients of the ARRA 65% COBRA subsidy are not eligible to receive HCTC subsidy for the same months.

Categories: COBRA